=======================Electronic Edition========================
RACHEL’S HAZARDOUS WASTE NEWS #305
—September 30, 1992—
News and resources for environmental justice.
——
Environmental Research Foundation
P.O. Box 5036, Annapolis, MD 21403
Fax (410) 263-8944; Internet: erf@igc.apc.org
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FREE TRADE–PART 3: HOW TO RECOGNIZE A
RELIGIOUS HUCKSTER WHEN YOU HAPPEN UPON ONE
Free trade is being promoted like a new religion. Like other
religions, free trade has a basic appeal: if artificial barriers
to international trade are reduced, everyone can buy more things
at cheaper prices. In theory all of humanity could benefit.
However, it must be obvious that increased trade will harm the
environment if it promotes increased consumption of goods made
from non-renewable resources or manufactured by polluting
technologies.
Therefore, free trade is only beneficial if it provides ways to
reduce environmental contamination.
There are three basic ways to restrict pollution. They go by the
names “command-and-control,” “full cost pricing” and zero
discharge.
Command-and-control is what we have been trying for the past 20
years. It uses both a carrot and a stick: subsidies, and
regulations. For example, if the goal is clean water, the federal
government offers low-cost loans (a form of subsidy) to
communities so they can build sewage treatment plants. Then a
regulation restricts the amounts of nasty chemicals that can be
discharged from the sewage treatment plant. An enforcement
bureaucracy checks to see that the regulations are obeyed. At
least in theory that’s how it works.
Another way to control pollution would be “full cost pricing.” If
the price of a toothpick reflected the full cost of making and
disposing of the toothpick (including all the pollution
involved), then the lowest-cost toothpick would be the
lowest-pollution toothpick and the market would become a
mechanism for reducing pollution. Advocates of this technique say
the way to make prices reflect the full costs of an item is to
(a) remove all subsidies, and (b) impose pollution taxes. If
toothpick manufacturers had to pay a tax on every pound of
pollution they emitted, they would have to include the tax in the
prices of their toothpicks. If a competitor could discover a way
to cut pollution, he or she could pay less tax and could drop the
price of toothpicks accordingly. Naturally the public would buy
the cheaper toothpicks, thus rewarding reduced pollution.[1] A
third way to control pollution is zero discharge.[2] Zero
discharge forbids the intentional release of any synthetic
chemicals (chemicals that do not occur in nature), and it forbids
the release of naturally-occurring chemicals in concentrations
greater than the concentrations that occur in nature. There are
two ways to achieve zero discharge of a chemical: ban the
chemical entirely so no one can legally use it; or, require that
manufacturers use “closed loop” technologies that prevent all
intentional releases to the environment. Naturally, with “closed
loop” technologies there will be unintended releases (spills,
accidents, and so forth), so discharges will be greater than zero
under this plan. The only way to achieve a true zero discharge is
to ban a substance entirely, the way the U.S. banned DDT and PCBs
in the 1970s.
It is worth noting that these different approaches are not
mutually exclusive. You could establish true zero discharge
limits for particularly dangerous substances, such as chlorine,
and force a phase-out; establish a pollution tax on coal and
petroleum to make their prices more closely reflect their costs;
and establish a tight numerical limit on sulfur released from
coal and oil combustion to keep from making people sick.
We do know, however, that command-and-control by itself does not
work. We know because the U.S. has tried it for the past 20
years. As a result, we have thousand of pages of regulations on
the books. We have an enormous and enormously expensive
pollution-control bureaucracy in every state and at the federal
level. And we have a dangerously polluted planet, and a situation
that is steadily worsening.
Today nearly everyone agrees that command-and-control is too
expensive and isn’t achieving the goal of a sustainable
environment. Even the U.S.’s major polluters seem to recognize
that command-and-control won’t reduce pollution sufficiently to
prevent destruction of the planet as a place suitable for human
habitation. For example, Robert D. Kennedy, the chairman of Union
Carbide, recently said, “It’s painfully obvious that we have
neither gone far enough nor fast enough.”[3]
The Business Council for Sustainable Development–a consortium of
the world’s largest polluters, including the heads of Dow
Chemical, Du Pont, Shell Oil, Alcoa, Chevron, Nissan Motor,
Mitsubishi Corporation, and about 50 others–has recently come
out strongly favoring full cost pricing. The Council says, “…we
must ask ourselves why the past record of industrialization is
largely one of unsustainable resource use and high levels of
pollution. The answer is that markets have simply not efficiently
reflected the costs of environmental degradation.”[4] And the
Council says, “The cornerstone of sustainable development is a
system of open, competitive markets in which prices are made to
reflect the costs of environmental as well as other resources.”
How do we adjust prices so they begin to reflect the full costs
of producing items for commerce? The Business Council says, “The
first priority must be to abolish subsidies so that prices at
least reflect the full economic costs of energy.”[5] If a
toothpick is manufactured from wood that has been transported a
thousand miles, the cost of that transport needs to be reflected
in the price of the toothpick. This means the true cost of fuel
(petroleum) needs to be factored into the price of the toothpick.
So long as the price of oil is kept artificially low by hidden
subsidies to the petroleum industry, the price of toothpicks is
kept artificially low and the true costs of producing toothpicks
will not be reflected in the price paid by the purchaser of
toothpicks.
David Morris–one of the most thoughtful and interesting critics
of free trade–recently wrote,[6]
A FEW YEARS AGO I WAS EATING AT A ST. PAUL RESTAURANT. AFTER
LUNCH I PICKED UP A TOOTHPICK WRAPPED IN PLASTIC. ON THE PLASTIC
WAS PRINTED THE WORD, ‘JAPAN.’ NOW JAPAN HAS LITTLE WOOD AND NO
OIL. NEVERTHELESS IT HAS BECOME EFFICIENT ENOUGH IN OUR GLOBAL
ECONOMY TO BRING LITTLE PIECES OF WOOD AND BARRELS OF OIL TO
JAPAN, WRAP THE ONE IN THE OTHER AND SEND THEM TO MINNESOTA. THIS
TOOTHPICK MAY HAVE TRAVELED 50,000 MILES. BUT NEVER FEAR, WE ARE
RETALIATING IN KIND. A HIBBING, MINNESOTA FACTORY NOW PRODUCES A
BILLION DISPOSABLE CHOPSTICKS A YEAR FOR SALE IN JAPAN.
IN MY MIND’S EYE I SEE TWO SHIPS PASSING ONE ANOTHER IN THE
NORTHERN PACIFIC. ONE CARRIES LITTLE PIECES OF MINNESOTA WOOD
BOUND FOR JAPAN; THE OTHER CARRIES LITTLE PIECES OF JAPANESE WOOD
BOUND FOR MINNESOTA. SUCH IS THE LOGIC OF FREE TRADE.
Such absurd trade goes on because the full cost of transportation
(chiefly the cost of burning oil, including the cost of warming
up the whole planet–see RHWN #300 and #301)
is being subsidized
so the purchasers of Japanese toothpicks in Minnesota are not
paying the true costs of those toothpicks. Mr. Morris gives half
a dozen other examples of costs that are not reflected in price
and thus prevent market mechanisms from helping humans achieve
sustainable communities.
So the thoughtful critics of free trade and the thoughtful
advocates of free trade agree on one important point: free trade
will harm the environment if the full costs of commodities are
not reflected in the prices of commodities. “…Free trade
advocates acknowledge that the environmental benefits of free
trade will be realized only if ‘environmental costs’ are
internalized in the price of products through process standards,
pollution taxes, or pollution permit schemes,” says a recent
report on free trade by the Environmental Grantmakers
Association.[7]
Serious advocates of free trade can be distinguished from mere
religious zealots by their strong desire to end government
subsidies–particularly in the energy sector of the economy–and
by their insistence on full cost pricing and zero discharge as
techniques for pollution control BEFORE free trade agreements can
be signed.
By this criterion, present-day proponents of NAFTA (the North
American Free Trade Agreement which President Bush has proposed,
to link Canada, the U.S., and Mexico into a free trade
partnership), and GATT (the General Agreement on Tariffs and
Trade–see RHWN #303 and #304) must be
classified as religious
hucksters promoting defunct and discredited mythologies left over
from the Reagan years, aiming merely to make the world safe for
corporate polluters, not for people.
–Peter Montague, Ph.D.
===============
[1] Allen V. Kneese and Charles L. Schultze, POLLUTION, PRICES
AND PUBLIC POLICY (Washington, D.C.: The Brookings Institution,
1975).
[5] Schmidheiny, cited above, pg. 39.
Descriptor terms: free trade; zero discharge; sustainable
development; nafta; gatt;